Mortgage Financing in Bulgaria:
Developments, Housing Market and General Backgroundi
Tzveta Dimitrova, IME Daniela Vladimirova, DSK Bank Dr. Krassen Stanchev, IME (editor) Martim Dimitrov, IME
i This paper is especially redrafted for the needs of the USAID Pension Reform Project and CARANA Corp. Round Table on Mortgage Bonds Horizon as Long Term Investment (October 23, 2000, Sofia).
Tveta Dimitrova and Daniela Vladimirova wrote the orginal version of the paper with IME contribution as a Country Paper for the OECD Workshop on Housing Finance in Transition Economies, which was held in Paris, on June 19-20, 2000. Along with IME, OECD has the copyrights for that early version.
The current version is completely reedited and updated; the only missing data are on the housing industry developments in the recent years, which become available when the paper was ready for print.
Mortgage Bond Law and Mortgage Financing
Law on Mortgage Bonds
In early October 2000, Bulgarian parliament passed the Mortgage Bond Law.
It was intiated by IME and the Association of Comercial Banks, drafted by IME and submitted to the legislature by Mr. Nikola Nikolov, chairman of the Economic Policy Committee. The drafting team utilized approaches adopted by other transition countries, notably Poland and Hungary and reflected upon the experiences of Czeck Republic, Germany and Denmark. It benefitted from the critical knowledge and advice of Mark Reidy, professor of Mortgage Finace at the Uiversity of San Diego, former president of the American Mortgage Bankers Association as well as from the colaboration and support of many Bulgarian bankers and representatives of non- banking financial industry.
The key peculiarity of the Bulgarian approach is that the primary mortgage market has been left on its own natural development trends, avoiding government guarantee schemes and creation of specialized institutions, e.g. mortgage bank. It can be explained with background reasons and attitudes. Another peculiarity is the exclusion of the land market from the mortgage bond framework.
The purpose of the law on mortgage bonds is to establish the legal framework for issuing of this instrument on the Bulgarian financial market whereas its parameters and the requirements for its issuing and trading should comply with the European tradition and practice with respect to the financial markets globalization.
The law on mortgage bonds gives every bank licensed by the Bulgarian national Bank the right to issue securities ("mortgage bonds") backed by its portfolio of credits secured by one or more first-ranking mortgages over real property. The basic parameters of the mortgage bonds as debt instruments were set in this draft:
Mortgage Bonds Collateral
Mortgage bonds collateral are mortgage credits /main collateral/ or assets with zero risk weight in accordance with the classification set in a regulation of BNB /substitute collateral/. The substitute collateral should not exceed 30 per cent of the issuing bank's liabilities on the outstanding mortgage bonds. Mortgage loans are used as a collateral up to 60-80% of the mortgage appraisal value of the real property (the exact per cent depends on the type of the property).
The purpose of these limitations is the collateral risk minimization. The credits are used as a collateral at a value lower then the mortgage appraisal value. The main collateral/substitute collateral ratio requires a better management of the maturity structure of the bank's claims on mortgage loans and the liabilities on mortgage bonds in terms of decreasing the risk evolving from the temporary disbalances in cash flows and worsened liquidity.
Collateral Register
The issuing bank is obliged to keep a register of the issued mortgage bonds collateral. The bank constitutes a special pledge1 on the claims stemming from the credits included in the register. The register includes different pools of credits used as a collateral for separate mortgage bonds issues. The access to the register is set in bank's internal regulations, which do not insult the bank secret. The bank is obliged to
manage and report separately the assets included in the collateral register and may not impose any other burdens on them.
The purpose of these regulations is to secure the claims of the mortgage bonds creditors and to assure them accurate information for the collateral's composition and its quality. The separate reporting of the collateral isolates these assets of the bank from the others and decreases this portfolio's risk for it is composed of claims with lower risk (collateralized with a real property).
Mortgage Appraisal of the Real Property
When appraising the real properties, which secure credits, used as mortgage bonds collateral the bank should apply the methods listed in the draft law - method of comparative sales, method of revenue valuation and method of material value.
Appraisers should satisfy strict qualification requirements. The bank sets internal rules for the conducting and keeping documents for the appraisals. New appraisals are made in certain cases when credits are classified in a higher risk grade.
These provisions require the application by the issuers of common rules for real property appraisal as well as the application of the most proper methods. One of the purposes of the draft law is to decrease the risk connected with the property appraisal in order to minimize the mortgage bonds risk itself. So they are stable and the bank has the possibility to refinance its activities at lower price then it would be if it had issued common bonds.
Issuing of Mortgage Bonds
The law envisages that mortgage bonds will be issued under the existing legislation as described above. Additional requirements are set to the prospectus/the offer to subscribe to the issue including internal rules of the issuing bank (set in this law) as well as the main characteristics of the collateral portfolio.
Preferential Claim on Collateral Assets in Case of Insolvency
The draft law sets preferential regime for claims of mortgage bonds creditors in accordance with the usual European practice. In case of insolvency of the issuer the claims on credits included in the collateral register are separated from the common assets of the bank. A trustee, appointed by the courts, separately manages these claims. He or she acts simultaneously to the assignee that is appointed by the court in case of insolvency of the bank. The trustee has the rights and obligations of the assignee in respect of the assets included in the collateral register.
The law does not change in any way the existing legislation in respect of the mortgage regime, the regulations of the Bulgarian National Bank or the common order of bond issuing.
Moreover, the creation of this instrument known for more then 200 years in the European practice is possible because of the good regulation of mortgages and the application of supervisory requirements which are unified with EU standards. The purpose of the law is the minimization of risks beared by the banks in their credit activity and respectively risks beared by bond creditors as well as decreasing costs of mortgage financing and allowing easy access to mortgage credits as a long-term source of financing for a broader range of people and companies.
Market Demand for Bonds
Currently the bond market in Bulgaria is equal to the government securities market. So far, only few companies dared to issue corporate bonds. These are Prosoft AD, Kaolin AD, Energija AD and the Black Sea resort Albena. All of the bonds are issued on the domestic market and are not traded on the stock exchange (they were placed privately). Additionally, on the domestic market were issued bonds of the Svistov Municipality and on the foreign market - small issue of eurobonds of the Sofia Municipality.
Here are two examples of issues, which were placed successfully:
• Prosoft AD issued 5-year corporate bonds in nominal value of BGL 300,000. The issue value is equal to the face value of the bonds (the company took over all charges for the Securities Commission, marketing, etc.). A "buy-back" option is included in the contract. The interest rate is the base interest rate of the Bulgarian National Bank + 6p for the first three years and the base interest rate of the Bulgarian National Bank + 6.5p for the last two years.
• Kaolin AD issued bonds with total volume of BGN 2,500,000 and 10% interest rate.
The issue of Svistov Municipality was not very successful. The total volume is BGL 371,000 and only about half of it was placed. 18% of the issue were acquired by municipal firms which actually had to gain from the money collected by the Municipality from the issue.
So the main issuer of bonds in Bulgaria is still the Government.
Investors in Bulgaria could acquire government securities on the primary or the secondary market.
On the primary market they can buy securities on the auctions organized by the Bulgarian National Bank. Only the so-called "primary dealers" (approved by the Bulgarian National Bank and the Ministry of Finance) may participate in the auctions.
These are banks or investment intermediaries (as defined by the Law on Public Offering of Securities). Investment intermediaries may participate with:
- Competitive orders – for their account or for the account of their clients Or
- Non-competitive orders – on the account of their clients, which are not banks or investment intermediaries.
- The Bulgarian National Bank determines before the auction the share of the government bonds offered for competitive and non-competitive orders.
The Bulgarian National Bank buys back the government securities before its day of maturity on decision of the Minister of Finance on auctions, too. The issue which is to be bought back could be replaced by a new issue of government securities or the face value and the interest could be paid to the holder. Only competitive offers are being accepted.
Main players (buyers) on the market are the banks, the insurance companies, the newly created Fund for bank deposits guarantee, pension companies, individual investors.
With so many players on the government securities' market and having in mind the government's policy towards decreasing of the domestic debt it is no surprise that the return from government securities falls constantly. All government securities regardless of terms and maturity are placed. But soon a hunger for alternative investment opportunities is expected. Many new pension companies, a huge State Healthcare Institute and the Fund for bank deposits guarantee have been established.
Funds accumulated by these institutions will have to be invested in low-risk securities.
A USAID research within the Pension reform project confirms these expectations. It says that only in the year 2000 $18,4 million will be accumulated and by the year 2004-$64,3 million.
The potential buyers of mortgage bonds are almost the same - voluntary, universal and professional pension companies, life insurance companies, investment companies and individual investors. In the transitional and final provisions of the draft law on mortgage bonds there are some changes to other laws provided. These changes are an attempt to facilitate the possibility of all these provisional players to invest in
mortgage bonds.
Mortgage Loans
History of the mortgage market in Bulgaria
Until 1989 it was only the State Savings Society (now the DSK Bank EAD) that provided mortgage loans. The recipients of loans were natural persons only and the bank financed the building and purchasing of housing, the acquiring of shares in real properties for the purpose of their complete buy-out, acquiring of sites for building. In most cases it was the state or municipalities that were the sellers as they had the legal obligation to build and sell homes to the population. The complete government control over the process of building and sales of housing, the financing of the purchases and the return of credits eliminated the danger of losses resulting from insolvency and abuse. During that period of time the bank gained substantial experience with clients in mortgage loans made for the purpose of buying homes.
There were also considerable government subsidies expressed in writing off by the state of part of the debt under certain conditions, crediting mostly long-term customers, etc. Interest rates were very low (3 per cent simple annual interest). Loans could be paid back within 30 years.
After 1990 the state stopped subsidizing and facilitating natural persons in the purchase and building of homes both as builder and seller and in terms of financial facilities. The DSK EAD Bank kept its credit products on offer but the high inflation which resulted in extremely high interest on such loans (reaching 300 per cent) reduced substantially demand in the credit market. The financial stabilization after 1997 stabilized interest rates but the population’s buying power was already too low to bring back demand. The bank was no longer in a position to do long-term planning and reduced the term of mortgage loans to 9 years. The reason for this can be found in the structure of the deposits. These are mainly redeemable “on sight” and it is only thanks to its empirical experience with non-depreciative remaining assets that the bank can afford to offer such long-term loans.
Following the adoption of the Banks and Credits Act in 1992 commercial banks in Bulgaria became able to legally finance the commercial activity of businesses. This is actually the larger mortgage market in the country. It underwent
the same stresses as the home mortgage market. This is generally a very short-term market. The usual term of business mortgages is between 12 and 36 months. The reasons for this are the banks’ inability to make long-term planning because of a changing economic environment and the rather short term of the deposits used to finance crediting operations.
Unfortunately, Bulgarian National Bank does not require the banks which extend mortgage credits to report separately on their volume. Additionally, the reporting requirements are being change almost every year so it is impossible to give comparable data for the period 1995-1999. We can only outline the development of the housing loans market and give data for 1999 and partially for 1998.
Since the beginning of 1998 (when a tendency towards macroeconomic stabilization was witnessed) the demand for credits increased significantly. The individuals and firms were willing to take credits although they knew that their property will be mortgaged in favor of the bank, the interest rate is relatively high and the bank can increase it unilaterally (such clause is still included in the credit contracts). On the other hand, as described above, the supply of credits in the Bulgarian banking system is limited.
Currently all housing credits are mortgage credits and no other form of housing financing is being used. People who are not willing to mortgage their property usually gather money from relatives and friends and/or use their own savings.
The "monopolist" on the housing financing market is DSK Bank. In 1998 outstanding residential mortgage credit in DSK Bank was 70,709,000 denominated leva (about USD 42,214.328), which accounted for about 90% of the residential mortgage credit in the whole banking sector.
The other very active player on the market is Bulgarian - American Credit Bank. In 1999 both banks have extended mortgage loans accounting for about USD 103,316,384 (See Table 17). Out of them 56.7% are housing loans. However, housing credits account for 54% of DSK Bank's portfolio and only 6.9% of the BACB portfolio. The volume of housing loans extended by other banks is negligible.
Types of Mortgage Loans Extended by DSK Bank and BACB (% of respective bank's portfolio)
Bank Housing Loans Corporate Loans* Consumer Loans**
DSK Bank 54% 19% 27%
Bank Housing Loans Hotel Loans Others
BACB 6.9% 29.3% 63.8%
*For purchasing of tangible fixed assets
** Mortgage consumer loans of DSK Bank are only 10% of the total volume of consumer loans in the bank's portfolio.
Housing and consumer loans are extended only to individuals. Consumer loans of DSK Bank are not necessary mortgage loans. For housing loans both banks consider this a must. Corporate loans of DSK Bank are two types - for purchasing of tangible fixed assets and for working capital (this loans are not necessary secured by mortgage2). The hotel loans of the BACB are extended to owners of small and medium-sized hotels and are secured by a mortgage.
Legal framework
Ownership rights on real estaste
Bulgarian law differentiates between material and non-material property. Real property belongs to the so-called material property.
The evolution of social relations has contributed to making parts of the Earth’s crust a certain kind of property and at the same time to have separately in existence and to set apart as a separate type the buildings and plants that are on the surface of the Earth. Such a differentiation has also been accepted in Bulgarian law. It also permits one building to consist of several floors so that each floor or dwelling may constitute an individual real property.
Bulgarian law recognizes a limited number of property rights. Persons may institute only such property rights as are provided for by the law and the content of which is defined by the law. These property rights are ownership, user rights, superficiary rights, and servitude. Some of these are also referred to as “limited property rights”.
The right to own property is constitutionally guaranteed in Bulgaria. Private property is inviolable. Under Bulgarian law anyone can be the owner of real property.
This is true of natural persons, corporate bodies and the state. Foreign persons may own real property within the country with the permission of the Ministry of Finance.
Foreign persons can, however, acquire long-term user rights over buildings used for transacting business inside the country. Foreign diplomatic missions own real estate for the purpose of performing their diplomatic functions. The state enjoys exclusive ownership rights over certain real properties and no other person apart from the state may acquire such properties. These material properties are the rivers, lakes, seas, natural resources, certain facilities with a bearing on national security, etc.
The Constitution is the primary source of the right to own property in Bulgaria.
The current law, which regulates the property regime, is the Property Law. Other enactments pertaining to property, and to real property in particular are: the Territorial and Urban Development Act and the regulation on its implementation, Regulation No.
5 of Building Rules and Standards, the Regulation on the Management of Order and Supervision of Multi-dwelling Buildings, the State Property Act, the Municipal Property Act, the Obligations and Contracts Act, the Code of Civil Procedure, the Concessions Act, the Vienna Convention, The Notaries and Notary Business Act, the Ownership and Use of Farm Land Act and certain other pieces of legislation and regulations. These are the legal instruments, which generally define and regulate the regime of ownership of real property.
Registers of real property: nature of rights over real estate
For a property transaction to be valid the party transferring property rights should be the owner of the property. Therefore there should be a way to prove ownership rights over real property. That is why it has been the purpose of the law to facilitate as much as possible the verification of ownership. All deeds for real estate are recorded in special registers kept by the district courts, by recording judges in particular, and until recently by the public notaries.
As early as September 1, 1910, a system of recording deeds was established with the Privileges and Mortgages Act (repealed). This system was mostly borrowed from Belgium and Italy. Though it is no longer in force, this act laid the foundations of a good system and tradition in Bulgaria.
Recording is done for the purpose of publicizing deeds so that third parties may obtain information in respect to real properties that are of interest to them. The laws, which regulate the recording regime, are the Property Law, the Notaries and Notary Business Law, the Regulation of Recording, the Obligations and Contracts Law, the Civil Procedures Code and some other regulations.
The following system for making records and keeping registers has been adopted in Bulgaria:
1. Incoming and outgoing mail register: used to record all letters, announcements, notices and replies pertaining to the notary’s business;
2. List of notary files: provides a chronological description of all notary cases. Every year starts from number 1;
3. Register of notarized last wills and testaments and their annulment.
Recording is done on the day of making the last will or on the day of its annulment;
4. Register of last wills and testaments submitted for safekeeping.
Information about last wills, their announcement and return is recorded in this book;
5. Register of contest and certification of signatures, dates and copies of documents. This register may be kept jointly or separately by items depending on the volume of records;
6. Alphabetical indices: these are kept only for notary cases and last wills;
7. Register for certifying the content of private documents;
8. Notary Invitations Register;
9. Register of Deeds: formed by the collection of all deeds legalizing transfer of ownership rights;
10. Records Register; formed by the collection of notarized copies of contracts, affidavits, applications, and distributions of property among heirs by the courts;
11. Register of deeds on contract mortgages;
12. Register of Legal Mortgages: applications are recorded in the order they are received;
13. Register of Prohibitions: carried out at the request of executive judges;
14. Incoming Register: kept and ended each day. It shows the daily number of records and notes;
15. Filing Register: this is the most important book in respect to records because it is a true mirror of the legal status of real properties;
16. Alphabetical index: Directly linked with the list of notary files and is kept simultaneously with it.
The organization described above has established a streamlined recording system and hence a system of announcing documents and circumstances related to the ownership of real property and the transactions involving such property This provides maximum guarantees of the people’s legal rights and interests.
Regulation of mortgages
Bulgarian law recognizes contracted and legal mortgages. The first is a mortgage, which arises upon the signing of a mortgage contract executed in the form of a deed. Both the one who owes the debt and a third party may use an object as collateral for the creditor. The deed contains certain data such as information about the credit recipient, the amount of the loan and especially information about the property, which services as collateral.
With the legal mortgage the law provides the direct submission of collateral for certain creditors for the purpose of guaranteeing their receivables, for instance when banks credit the purchase of real estate, and in court distributions of estates for equalizing shares of heirs. In certain cases where the state is the creditor, the right to legal mortgage is also instituted.
Recording is an important element of the mortgage. A mortgage is instituted through its recording. This provides for the mortgage to become known. This strengthens the mortgage regime and provides protection to third parties acting in good faith. Recording is done in the notary registers, ex-officio by the recording judge for the area where the property is located. Recording is done in an established order.
Mortgages are struck at the request and with the consent of the creditor and also pursuant to court rulings. Striking may also occur at the request of the buyer of the property who has purchased it at public auction.
Mainly Law on Contracts and Obligations, the Notaries and Notary Business Act, the Regulation on Recording, the Civil Procedures Code, etc regulate the mortgage regime.
Forced realization of mortgages
If the debtor should fail to fulfill his obligations to the creditor and the credit is secured by collateral, the latter may require the forced sale of the real property for the purpose of redemption of the debt from the price of the collateral.
Execution of the request in respect to real estate is governed by the Bulgarian civil procedure of forcible execution. The Code of Civil Procedure regulates this process. The real property is sold at public auction. The sale is public because an unlimited number of persons may participate in the sale as bidders. They are invited to take part by the executive judge by special announcements. The public sale continues for one month and is held in the office of the executive judge. That is where participants place their bids and where a buyer is finally selected. The person who has made the highest legal bid is announced as the buyer. This act alone does not make the winner automatically an owner. The winner of the sale receives the right to become an owner and is given five days to pay the price to the account of the executive judge. Following payment, the executive judge assigns the property to the announced buyer by issuing an assignment order. Assignment has legal consequence in respect to the property and transfers ownership rights over the real estate to the announced buyer. The assignment order is recorded in the notary registers and is equivalent to a deed under the Property Act and the Regulation of Recording. This ensures the rights of the new owner who has acquired the property as a result of forced action against the previous owner. The executive judge uses the money raised from the public sale to satisfy the creditor and returns any leftover amounts to the debtor.
Quite often a debtor will have used one piece of real property as collateral with a number of creditors. In such cases a distribution is made to satisfy all creditors. This distribution hence indicates a number of creditor claimants in one executive procedure
and insufficiency of the moneys raised from the execution. Distribution is done by order of the executive judge who identifys the receivables that may be subject to receipt, the manner in which the creditors are satisfied and the amounts of money allocated for full or partial satisfaction of each creditor.
The executive judge carries out the distribution by placing first the privileged creditors followed by the creditors at large. He first allocates whatever money is necessary for fully satisfying the first credit in the order of privileges. Any leftover amounts are used to redeem the second loan. If the amount raised should prove insufficient, only the highest-ranking creditors are satisfied while the remaining privileged and creditors at large are not satisfied. If any moneys is left for the creditors at large, these are satisfied in proportion to the amounts due to them /Article 133 of the Law on Obligations and Contracts /. Proportional satisfaction is also applied to several loans of equal privilege /Article 136, paragraph 3 of the Obligations and /Contracts Act/. It should be noted here that the Civil Procedures Code as part of executive procedure regulates the public sale regime, while the distribution of the amounts raised can be found in the Obligations and Contracts Law referred to in the Code.
The actions described above constitute the procedure of forced execution in respect to mortgaged properties and the satisfaction of one or several creditors. There is a stable legal mechanism for instituting mortgages and their realization in Bulgaria.
Regrettably, the absence of a well-developed real estate market leads to overburdening of this process and it’s emptying of content. Still, the legal framework is an efficient and appropriate basis for guaranteeing loans.
Purpose of mortgage loans
A mortgage loan as a term in European financial practice is a credit guaranteed by collateral (real property).
Bulgarian law does not provide an express definition of “mortgage loan” but banking practice has assumed a similarly broad definition. Besides, the property of a third party may be used as collateral for the loan.
Defining a credit as a mortgage loan does not depend on the use to which the borrowed money is put, neither does it depend on the kind of person who receives the loan (natural person or corporate body). A mortgage loan can be:
- A loan to buy a home, or land for building a home, office space, an industrial building, etc.;
- A loan to build a house;
- A loan to reconstruct or improve a home;
- A loan to purchase shares in housing properties for the purpose of acquiring the entire properties;
- A loan to meet current needs of individuals (the so-called "consumer loans");
- A loan to obtain operating capital for businesses;
- Investment business loans;
- Loans to furnishing offices of the self-employed (physicians, notaries, lawyers, etc.).
Often the practice of approving mortgage loans to businesses and private individuals involves the use of collateral that is additional to the real property, such as personal property, guarantees by third parties, use of securities and bank deposits as collateral. If the value of the real property used as collateral less the insurance margins
covers in full the amount of the loan, the loan is still considered a mortgage loan irrespective of the variety of supplementary collateral used. In most cases, however, when Bulgarian banks credit businesses, the value of the real property is insufficient and other items are used as supplementary collateral. Two approaches are possible in this situation:
- To consider a mortgage loan that part of the loan which is covered by the value of the real property,
or,
- To finance the recipient of the credit by two loans: a mortgage loan in an amount equal to the appraised value of the real property and a second loan guaranteed by other means.
The absence of legislation to regulate the issuing of mortgage bonds has prevented Bulgarian banks from structuring their portfolios in such a manner as would enable them to use this long-term financing tool.
The Response of the mortgage bond regulations
The Mortgage Bonds Law clearly indicates that "mortgage loans" are loans secured by first-ranking mortgage on real property. At the same time an insurance margin is adopted not exceeding 20 to 40 per cent, i.e. the value of the loan does not exceed 60 to 80 per cent of the appraised value of the real property, which serves as collateral.3
This broad definition of the notion of mortgage is exceptionally appropriate due to the fact that it allows for a broad range of potential clients and emphasizes the low risk of loss to the creditor. The purpose of the loan always reflects the methodology of the appraisal of the property. The methodology indicates whether the anticipated income to be used for paying back the loan is the result of revenues from the use of the property or from other sources of income, or from a combination of both.
Client’s profile
Defining mortgages as independent of the purpose of the loan enables a broad range of business clients - natural persons and corporate bodies - to finance their projects with loans secured by mortgages over real property.
A study of the mortgage portfolio of the DSK Bank (the leading mortgage retail banking institution) demonstrates the following:
The natural persons using mortgage loans are individuals with stable income aged 30 to 50. This is explained by the need that arises at that age to acquire a home, to use consumer credit for furnishing a home, to start or expand the business of self- employed individuals. In most cases these are people working in stable and profitable commercial companies, people with good self-owned businesses, lawyers, notaries, self-employed consultants. The available data shows the exceptionally high return rates of these loans which is explained by their personal commitment to the bank and the traditional Bulgarian commitment of owners to their properties. Overdue payments on the mortgage loans of this client group amount to less than one per cent. Practically 99 of all loans are serviced regularly /incidental delays of 60 days are excluded/ and sale of the collateral for the purpose of satisfying the creditor is seldom applied.
The businesses using mortgages mostly are:
- Very small businesses needing operating or investment capital. These companies do not employ more than 10 people on average.
- Small and medium-size businesses under the definition provided in the Law on Small and Medium-size Enterprises which use loans as operating and investment capital.
For these two types of credit-recipients, banks face among the lowest risks to their receivables (the lowest percentage of delayed payments) because of the personal commitment of their owners.
- Companies building housing and office projects, travel companies and ones running hotels;
- Companies building or operating infrastructure-related businesses.
- Municipalities using loans for various purposes /healthcare, education, social projects, urban development and public works, conservation of the environment and for acquiring long term assets/. Municipal private property is used as collateral to secure these loans.
Terms and conditions
Banks have largely unified the terms and conditions of the mortgage loans.
This is the result of substantial legal regulation by means of laws and regulations of this aspect of the operations of the banking institutions. The regulatory provisions of the Law on Banks and the regulations issued by the Bulgarian National Bank are mandatory for the crediting businesses. The goal set in the restrictive provisions is to limit risks to banks in the course of their crediting operations. It should be noted though that the provisions are most liberal in respect to first mortgage on a piece of real property with appraisable market value which exceeds by 25 per cent the amount of the loan. These mortgages have a risk weight of 50 per cent and are included in the risk component of the balance sheet in an amount equal to half of their balance sheet value. Of lower risk weight are only the assets of the bank invested in available (cash) funds, “on sight” funds in the bank’s checking accounts, receivables from the government and receivables from foreign banks, organizations and countries on the special list of the central bank.
In order to get a mortgage loan approved by the bank, the credit applicant should generally meet the following requirements:
1. Good creditability. It is assessed by the ability of the applicant to fulfill his obligations in respect to the loan transaction under the terms of the contract so as not to threaten his financial situation and not to affect the interests of other persons.
Natural persons prove their creditability by indicating the sources and amount of their incomes for a preceding period of time and the anticipated sources of income for the period of payback of the loan. The individual should have sufficient funds left to ensure his support after deducting the monthly mortgage payments from his income.
The credit rating of businesses is proven by an analysis of the information in their accounting documents for a past period of time and an analysis of the forecast cash flows expected from the expansion of operations or the development of a new operation.
2. Positive rating of the individual credit risk of the applicant, i.e. the likelihood of him failing to fulfill or of him getting into a situation where he cannot fulfill the terms of the credit contract.
3. The value of the collateral should match the amount of the loan.
There is no legal regulation of the methodology of the appraisal. The law does place, however, certain requirements in respect to the persons who are doing the assessment. They should possess licenses to engage in such activity and should operate independently of the bank. The appraisal of the property must also provide indication of the methodology used. It is often the practice of banks to have their own experts re-examine appraisals made by outside assessors.
4. A mandatory element of the mortgage contract is the requirement that the client provides supplementary collateral if the market value of the real property used should drop below the required minimum corresponding to the amount of the loan.
5. There is a practice in the Bulgarian banking market for banks to allow credit users early redemption of loans. There are just a few banks, which charge fees for early redemption of loans, and such fees cover a portion of the loss of interest by the bank.
6. The following sequence is observed in redeeming loans:
- in case of regular service of the loans: fees, regular interest, principal;
- if payments become overdue (interest and/or principal) and/or in the case of violations of other contractual obligations: fees, interest overdue (interest that has become due), penal interest over the overdue principal, overdue principal;
- for credits collected by court order: fees, interest awarded by the court, legal interest on the principal, principal.
Pricing
The elements, which form the price of the mortgage credit are as follows:
1. Interest costs
As credits carrying the lowest risk of loss mortgage loans have the lowest interest rates. It is usual practice for banks to set interest rates of loans depending on the purpose of these loans. The interest rate covers the price of the monetary resource deposited increased with the profit required from the credit transaction. A risk supplement is added to this base interest rate which in the case of mortgages is the lowest possible.
Two approaches are used in everyday practice for assessing interest on loans:
compounded interest (redemption by annualized installments) and simple decursive interest (redemption of principal and interest on the loan calculated by the “staircase method”). With the “staircase” method interest is accounted on the remainder of the loan whenever there is a change in the amount of that remainder or whenever there is a change in the interest rate.
In the event of the principal becoming overdue or some other violation of the contract, the bank accounts penal interest on the amount overdue until the elimination of the violation. The penal supplement is a percentage added to the regular interest rate.
2. Fee for examination and appraisal of the collateral
This is a one-time fee collected upon submission of the application for the loan, which covers the bank’s expenses for studying the client, the purpose of the loan, for appraisal of the collateral, for obtaining the opinion of a credit expert and other costs.
3. Loan service fee
This is usually an annual fee collected at the beginning of every period and covers the costs of the bank incurred for monitoring the current creditability of the client, his compliance with the provisions of the credit contract and for subsequent appraisals of the collateral.
4. Costs of property insurance
It is an usual requirement for the real property serving as collateral to be insured in favor of the bank against all insurance risks that could bring about its destruction or a depreciation of its market value. The insurance should be able to cover all receivables of the bank in respect to the loan. The insurance is renewed every year until full redemption of the loan.
5. Costs of instituting collateral
These costs include state fees for notarization and registration of the transaction and lawyer fees for preparing the deed.
Currency of mortgage loans
As far as the kind of currency is concerned, it will be necessary to differentiate between mortgage loans depending on their use:
- Loans to private citizens (for purchasing or building homes and consumer credits).
Because of certain restriction of the currency regime in force until January 1, 2000, payments inside the Republic of Bulgaria could only be made in the national currency.
For this reason almost all loans to natural persons in the bank’s credit portfolios are denominated in Bulgarian levs.
- Loans to businesses – small and medium-size enterprises and other businesses - the volume of the loans in foreign currency depends on the imports of raw and other materials by domestic businessmen for the needs of their businesses because it is financed from bank loans. There is no statistical data of the percentage of mortgage loans of all foreign currency credits.
- Loans to municipalities and public authorities: due to legal restrictions /the currency regime and the budget laws/, loans to such recipients are denominated in the national currency /the lev/.
Loans (including mortgage housing loans) extended by DSK Bank are only BGL denominated and loans extended by BACB4 are denominated in USD.
Maturity
The maturity structure of the loans in the banks’ mortgage portfolios is determined by the purpose for which these loans are extended.
With mortgages to individuals /housing and consumer/ there is a presumption that these are repaid from the monthly income of the recipient. Thus, these loans are monthly redeemed in equal installments that include interest and principal (calculated using the formula applied to annuities). There is no grace period in respect to redemption of the principal.
A grace period in respect to redemption of the principal may be allowed for loans used to finance current operations. Usually agreement is reached on the period of time during which the loan is consumed (one-time or in parts under a plan).
Redemption is made pursuant to redemption plans and usually include interest (simple decursive) and portions of the principal.
With loans for investment purposes or ones used to fund seasonal operations /construction, operation of hotels, etc./, the maturity structure of the loan varies depending on the financed investment project. A grace period in respect to redemption of principal may also be agreed upon. It is possible to concentrate redemption at the end of the agreed upon period of the loan, as well as to agree on redemption of the principal in one installment at maturity. Interest is paid on a monthly basis and is calculated as simple decursive interest.
Interest rates
Generally, interest rates on loans in the Bulgarian banking system depend on the base interest rate of the Bulgarian National Bank. The base rate is determined on the basis of the income from short-term treasuries. Treasury auctions are held weekly and changes in their interest rates result in changes of the base rate. The stability of the financial system during the last two and a half years has resulted in stability (evidenced by the insignificant changes in treasury return) of the base rate. For the entire period it has fluctuated between 3.5 and 5 per cent. This has enabled banks to refrain from significant changes in the interest they charge on loans, or at least to refrain from changing rates as a result of changes in the base interest rate. Stability has also resulted in a reduction of the supplementary charges for general financial risk.
The base rate charged by banks is now between 10 and 15 per cent. Various risk premiums are charged and can reach 10 per cent.
Policies and general bank procedures to process credit applications and expectations in respect to market demand in the future
A bank’s credit policy usually includes:
- Procedure for receiving and processing credit applications and the documents required by the bank
- Determination of a target client group
- Decision-making procedure in respect to approval of loan contracts
- Types of loans, manner of calculating interest, collateral (admissible collateral) - Procedure for managing bad debt and for redemption from the collateral
Banks conduct their credit operations through their branch offices serving the respective region with reference to:
- Place of residence or registration of the business of the borrower - Commercial or tax registration of the borrower
- Place of employment or usual place of doing business of the borrower
- Location of the financed object
Banks have usually shown themselves to be more likely to finance their regular clients. Loans are approved within one month of receipt from the client of the required documents. The documents themselves are standard bank forms. Especially trained individuals (credit inspectors) process the credit applications and provide opinion on them. The decisions to sign a loan contract are made by the credit board at the branch office depending on the powers vested in it (decision-making scale). It is usual for larger loans (amounts exceeding a pre-set limit) to be authorized by a decision of the central credit board. Loan transactions are based on a contract in writing between the bank and its client (a natural person or corporate entity).
Banks will not provide financing to clients:
- Who have been declared insolvent or are subject to insolvency or liquidation procedure
- Whose credit rating was found unacceptable by the bank - Who are not able to provide adequate collateral
- Who do not possess or possess to an insufficient degree own funds for participation in the financed project.
The acceptable interest rate levels offered by the banking system have encouraged greater demand for loans. This factor, coupled by statistics showing that most Bulgarians own real property provide grounds to expect stronger demand for mortgage loans by individual clients and commercial enterprises. With due consideration to these basic conditions and pursuant to the analysis of the macroeconomic factors it can be assumed that:
- A considerable portion of the housing is located in villages, small towns and depopulating areas. This means that there is no market for such real property and banks are reluctant to take the risk of providing financing against collateral in such regions;
- A considerable portion of the hosing in the major cities consists of prefabricated homes. The low lifespan of this type of housing and the considerable investment required for its maintenance (comparable to the cost of new housing) is ñonducive to strengthening the interest of the more affluent in obtaining loans for building or purchasing new homes;
- The migration from economically underdeveloped regions to areas with more stable economic development will certainly result in the migrant population looking for loans to buy or build homes in these areas;
- The need for new housing provides grounds to expect greater demand for mortgage credits by building contractors;
- The efforts to develop the tourism industry will certainly involve a stage of replacement and renovation of the resorts, which raises expectation of greater demand for mortgages among hotel operators and owners of tourist resorts.
The provisional strengthening of the demand for mortgage credits however, is subject both to the buying power of the individual clients and to the anticipated return of investments by business people.
Appraisals
Availability, qualifications and independence of the appraisers of real property
• Availability
Pursuant to Article 7, paragraph 2 of the Regulation of Appraisal of Objects Subject to Privatization, issued on April 26, 2000 the by Privatization Agency had issued the following number of licenses to natural persons for appraisal of:
—real property- 4,354;
—machinery and equipment- 2,051;
—rights over intellectual and industrial property and other relationships, impact on the environment and environmental damage- 241;
—Council of Ministers Decree № 97/March 14,.1997: other assets (works of art, antiques, precious metals and gems and real estate constituting monuments of culture)- 155;
—entire state-owned or municipal companies (irrespective of whether these are or are not transformed into commercial companies)- 2,229;
Licenses are also issued for appraising financial institutions.
• Qualifications
Licensed appraisers are natural persons with university education who know the general principles and methods for appraising real estate, have declared their acceptance of the Code of Ethics of the appraiser profession and have been licensed by the Privatization Agency.
Licensed appraisers should possess:
—practical skills and knowledge;
—professional training;
—technical knowledge.
They should appraise real estate pursuant to international standards and in the conditions of a market economy. The introduction of standards in the various areas of appraising has regulated the general requirements in respect to the appraising procedures.
In developing these standards the appraisal-monitoring group with the Privatization Agency has studied all available information on the international experience in this area and has selected the appraisal methods, which are most appropriate for the Bulgarian market economy.
It has been established that the most detailed studies of appraisal standards have been made in the areas of long-term assets and real estate.
The most important requirement in respect to the appraisal is to provide an accurate reflection of the market value of the property. The market movements and the risk of possible depreciation of the prices of real estate should both be taken into account.
Appraisers may carry out examination and appraisal of real estate prior to the submission of an application for a mortgage loan. They may also be employees of the bank, which provides the mortgage loan but must at any rate be licensed by the Privatization Agency.
The appraisers employed by such institutions are familiar with all relevant laws and regulations and with the banking standards.
All insured real and personal property is subject to appraisal.
Appraisal, requirements in respect to appraisals
The criteria for applying methods of appraisal depend on the type of property, namely single family homes, apartments, leased private homes, commercial and office premises, industrial and warehouse buildings, agricultural property, undeveloped land, public buildings such as hospitals, schools, hotels; machinery and equipment; other assets (works of art, antiques, precious metals and stones); entire companies; financial institutions, investments, tax assessments, appraisal of compensation, appraisal for the purpose of expropriation, accounting appraisal of assets, and credit appraisal.
The appraisal should be confined within the limits of an amount which any buyer who is well informed of the local real estate prices and the current market in terms of the various sizes, qualities and standards, could be reasonably expected to pay for a given piece of real estate.
Independence of appraisers, rights and obligations
In carrying out an appraisal, the appraiser should discharge his obligations and contracted duties in conditions of professional, legal and financial independence. To ensure that the appraiser operates independently and he cannot:
—enter into a relationship of illegal material dependence with his clients;
—participate in the managing boards of the clients;
—acquire property within the appraised real estate;
—disclose in any way whatsoever and for any reason whatsoever information about any property appraised by him and the appraisal itself to third parties.
The appraiser is obliged to provide information about the appraisal to his client and only to such third parties as his client may direct. He should be objective and unbiased and should not himself constitute a potential risk to his client’s interests.
Methodology
The appraisal method depends before all on the purpose of the appraisal (for what purpose an appraisal is made). A given property may be subject to tax assessment, or appraised for the purpose of insurance, sale, to serve as collateral or to secure a mortgage. It also depends on the type of the appraised property: real or personal, land, buildings, improvements, machinery, equipment, residential or non-residential, commercial, industrial, etc.
Practice has shown that only by choosing an appropriate method one can ensure that the goals of the appraisal of the property will be achieved. The appraisal of the property should be done using at least two appraisal methods. In appraising real estate for obtaining a mortgage loan with due consideration for local conditions, the most frequently employed methods are:
- Method of material value, i.e. what expenses would be incurred to create a new property of similar characteristics. Four components are subject to appraisal:
- Land
- Building improvements - Outside equipment - Other equipment
This method is applied to the appraisal of:
- Single family houses - Apartments
- Public buildings /hospitals, schools, churches, libraries, etc./
- Appraisal for approving loans, for assessing improvements for the purpose of investing, tax assessment, etc.
- Method of revenue valuation, i.e. projects where start-up capital is invested for the purpose of obtaining revenues in the future.
This method is applied to:
- lots adapted for obtaining revenue - homes for lease
- commercial properties /stores, catering establishments, etc./
- properties used for combined purposes - hotels, stores and offices
- lots with garages - industrial projects
- Method of comparative sales - this method can be considered as an alternative method in Bulgarian usage.
In it the value of a given property is established by comparing it directly to other properties, which are as similar to it as possible, which have been sold within a period of time that is close to the time of making the appraisal.
Market value is determined by a detailed study, verification and analysis of a large number of properties offered for sale. After a description of all elements of the comparison between the already sold property and the one which is subject to appraisal, an analysis is made followed by such corrections in the price as would reflect the monetary or percentage value of the differences found between the properties.
The application of the comparative method requires at least three reference properties which had been sold recently and which exhibit closeness to the appraised property in numerous parameters.
The Existing Systems Housing Finance
As already mentioned above, in Bulgaria there are no specific contract saving schemes, building societies, mortgage banks, etc. However, on May 17, 2000 the Economic Committee of the Bulgarian Parliament voted on first committee hearings the draft law on mortgage bonds. It is expected that it will be passed soon and within several months the two major players on the housing financing market in Bulgaria - DSK Bank and BACB - will issue mortgage bonds. What is envisaged in the law?
Legal regulation of bonds as securities
Bonds are regulated by the Commerce Act and the Public Offering of Securities Act and are subject to obligations and material law. Under the law, securities are transferable rights or documents, which materialize transferable rights. The Commerce Act does not provide a definition of bonds but its characteristics can be deducted from the texts of this law.:
- The bond as a security materializes the right to receive principal and interest - The bond may be backed by funds available or not. When it is backed by property
it gives rise to both an obligation and a material legal relationship: the right of ownership of its holder
- The bond may be issued to bearer or to a named individual - The bonds issued by a company may have various face values.
The Commerce Act provides regulation of the general requirements in respect to the issuer which make him eligible to issue bonds. Of all commercial companies, only the joint stock company can issue bonds. There are requirements in respect to:
- The amount of the company’s capital
- The volume of the bonds as a percentage of the company’s own capital.
Exceptions can also be made for issues guaranteed by the state or by banks (under the Commerce Act) and such issued by banks (the Banks Act).
- The history of the company. At least two annual accounting reports approved by the general meeting are required.
- The manner of resolving to issue bonds.
Issuing bonds
Under the Public Offering of Securities Law
One of the goals of the Public Offering of Securities Act is to regulate the issuing of securities (including bonds) in such a manner as to ensure transparency of the procedure and terms of the bond issue, adequate information for investors about the economic and financial state of the issuing organization, and reliability of the information. A further goal is to set the rules for securities trading in the so-called
“regulated markets”. The operation of a special commission, the State Securities Commission, is closely linked to attaining the goals of this law. One of the means to ensure observance of these goals is to require of the issuing organization to prepare a prospectus of the issue. The prospectus should include certain kinds of information and should comply with certain requirements in order to be approved by the State Securities Commission. The issuing company is not allowed to announce public subscription to the issue before the approval of the prospectus. The law provides for an opportunity for waiver of the prospectus if the securities are offered to institutional investors only.
Under the Commerce Law
Where the offering of bonds does not constitute public offering under the Public Offering of Securities Act, it is carried out under the Commerce Act. Such an opportunity has no legal regulation but cannot be excluded where the offer is addressed to one or more persons and the terms of the loan are a matter of contractual autonomy. When the loan contract is concluded with a person or by closed subscription it does not have the characteristics of a public offering.
It should be noted that a number of laws regulating the operation of investment brokers, pension and insurance companies require of them to invest only in securities traded in the regulated markets. This means that inasmuch as these companies are representative of the institutional investors and are the most important buyers on the bond market, the issuing of bonds under the Commerce Act is almost impracticable.
Housing Sector Overview
Current state of Bulgarian housing
Completed buildings
The basic unit used in the monitoring conducted by the National Statistical Institute is the home. The residential building will not be the object of the present study because it is a technical carrier of the home (or homes) and is only regarded as a secondary unit for monitoring.
On December 31, 1998 there were 3,437,555 homes in the country. The data about housing were obtained from the census of housing, held on December 4, 1992, and has been updated every year by addition of the newly built homes and deduction of the homes no longer in existence.
For instance, there were 3,414,079 homes in 1994, while 6,815 homes were built in 1995 and 957 homes were demolished so that on December 31, 1995 there was a total of 3,419, 937 homes in the country.
The number of homes /3,419,937/ was last to be published so far in the National Statistical Institute publication of “The Housing Fund” in 1996, and the classification of homes is therefore based on that publication as follows:
- by type of structure;
- by number of rooms in a home;
- by form of ownership /public or private/;
- by residential and non-residential area /as of 1992 the area of kitchens is considered auxiliary area /;
- by the distribution of homes by number and area in cities and villages.
Classification of homes by structure
By type of frame and floor structure buildings are divided into ferroconcrete, brick and temporary.
Ferroconcretes are those buildings the support structure and floor of which are made of ferroconcrete, while the walls are made of brick or some other material. Brick structures are those the supporting walls of which are of brick and stone masonry while all belts, beams and floors are made either of ferroconcrete or of steel or wooden beams. Buildings, which have prefabricated floor systems, are also classified as brick if no other prefabricated structural elements are used in their construction.
Temporary buildings are those that have a wooden frame of the outside walls filled with bricks, mud, woven tree branches, planks, etc.
A considerable part of the current housing is ferroconcrete - 38.9 per cent -including ferroconcrete buildings made of large prefabricated elements, to be referred to hereafter by their popular name of prefab buildings which account for 20.8 per cent and buildings with ferroconcrete frames, 18.1 per cent. Homes in brick structures make up the largest group accounting for 52.6 per cent of all homes. Despite the fact that the number of temporary structures has been dropping every year /a drop of 0.1
per cent was recorded in 1995/ 8.5 per cent of all housing is located in such buildings.
Most homes /59.3 per cent/ in the cities are located in ferroconcrete buildings. In villages, 78.0 per cent of the homes are in brick buildings.
Classification of housing in Bulgaria by structure and number of homes (by 31.12.1995)
Homes by structure Total Prefab
Buildings
Buildings with ferroconcrete
frames
Brick Temporary
Total number
3418837 710261 619226 1800597 289853
in cities 2147271 699503 57488 808014 64966
in villages 1272666 10758 44438 992583 224887
Classification of homes by number of rooms
Homes in Bulgaria are classified by number of rooms as follows: one-room- 403,566 or 11.8 per cent of all homes, two-room- 1,021,585 or 29.9 per cent, three-room- 1,062,834 or 31.1 per cent, and four-room or larger- 931,952 or 27.2 per cent.
Most homes consist of two or three rooms. Towns and villages differ in terms of number of rooms per home. In the cities most common are homes with two or three rooms, 36.3 and 30.7 per cent respectively, while in the villages homes with four or more rooms are most common (43.8 per cent of all homes).
Classification of homes in Bulgaria by number of rooms (by 31.12.1995 година)
4.16% ø åñòíàéíè 31.08%
òðèñòàéíè
6.66% ïåòñòàéíè 11.80%åäíñòàéíè
16.43%
÷åòèðèñòàéíè 29.87%
äâóñòàéíè
Number of rooms one-room two-room three-room four-room five-room six-room Total
homes 3,419,937 403,566 1,021,585 10,628,345 562,033 227,604 142,315
Residential area
The usable area of homes is the sum of the residential area, the auxiliary area and the area of the kitchens and amounts to a total of 217,707,831 square meters for the entire country, including residential area of 141,920,408 square meters or 65.19 per cent of all usable area.
There has been an increase of usable area in the country by 0.3 per cent matched by a 0.3 per cent increase in residential area. In the cities, the residential area accounts for 62.00 per cent of the usable area while for the villages this percentage is 70.4.
The general index of the country’s housing standard is the average residential area per person which amounts to 14.7 square meters in the cities and 21.4 square meters in the villages. The districts boasting the largest residential area per person are Montana with 19.2 square meters and Sofia with 18.8 square meters.
Residential area in Bulgaria in m2 and as percent of usable area (by 31.12.1995)
Usable Housing Auxiliary Kitchens
Total m2 217,707,831 141,920,408 47,116,415 28,671,008
% 100 65.19 21.64 13.17
Usable area including:
Residential area in Bulgaria in m2 and as per cent of usable area in cities and villages (by 31.12.1995)
Usable m2 Residential m2 Usable % Residential %
Total m2 217 707 831 141 920 408 100 65.19
in cities 135 108 567 83 748 628 100 61.99
in villages 82 599 264 58 171 780 100 70.46
% 100 100 - -
in cities 62.06 40.99 - -
in villages 37.94 59.01 - -
Residential area per person was calculated using the population number for the end of the year.
The residential area includes the areas occupied by living rooms, bedrooms, dens, dining rooms, studies and libraries, guest rooms. Kitchens are not part of the residential area.
The auxiliary area includes all service rooms: rooms with an area of less than 7.5 square meters, corridors, bathrooms, restrooms, closets, etc., irrespective of their size.
Type of ownership of homes and availability of housing to the populations of towns and villages
Most homes in the country are privately owned (92.6 percent). 89.6 per cent of all homes in the cities are privately owned while in villages 97.6 per cent of all homes are private. State-owned homes in cities account for 5.5 percent and in villages for as little as 1.1 per cent of all homes. The remaining homes are owned by companies and by public and cooperative organizations.
The residential area per person of the population was calculated using the number of the population at the end of the year.
There were 408 homes per 1000 people in 1995. The districts of Sofia and Montana had the largest number of homes per 1000 people, 449 and 444, respectively. Despite the concentration of housing construction in the cities, villages provided a better housing situation. While in the cities there are 379 homes per 1000 people, villages boasted 468 homes per 1000 people. The cities in the districts of Sofia and Rousse had the highest number of homes per 1000 people: 395, while the villages of the district of Sofia had the largest number of housing of all rural areas: 572 homes per 1000 people.
Each home is inhabited by an average of 2.48 people, or 2.64 people in the cities and 2.14 in the villages. The district of Plovdiv had the most people per home, while the districts of Sofia and Montana had the lowest number of people inhabiting a home.
Homes in Bulgaria by ownership and by location (by 31.12.1995)
Total number Publicly owned
number Private
number Total
% Publicly owned
% Private
%
Total 3 419 937 252 528 3 167 409 100 7.38 92.62
in cities 2 147 271 222 290 1 924 981 100 10.35 89.65
in villages 12 72 666 30 238 1 242 428 100 2.38 97.62
Housing by year
Homes by year, incl. usable, residential and auxiliary area in m2
1993 1994 1995 1996 1997 1998
Homes - total 3406 3414 3419 3427 3434 3438
Usable area 216465 217070 217708 218338 218943 219285
Residential area 141038 141447 141920 142323 142715 142931
Auxiliary area 75427 75623 75788 76015 76228 76354
Homes - in cities 2136 2142 2147 2154 2162 2162
Usable area 134034 134567 135109 135719 136376 136376
Residential area 82988 83346 83749 84141 84568 84568
Auxiliary area 51046 51221 51360 51578 51808 51808
Homes - in villages 1270 1272 1273 1273 1272 1272
Usable area 82431 82503 82599 82619 82567 82591
Residential area 58050 58101 58171 58182 58147 58163
Auxiliary area 24381 24402 24428 24437 24420 24428
Compared to 1993 housing in 1998 grew by about 32,000 homes. Residential area during that period grew by 1,893,000 square meters. Housing in the cities grew constantly in terms of number of homes and residential area between 1993 and 1997.
1998 was notable for absence of growth. In the villages, the number of homes grew between 1993 and 1995 then leveled off in 1996 and subsequently dropped and stayed
